Institutional investors, including public pension funds, foundations and endowments, are increasing their use of ETFs, according to a new study by Greenwich Associates. The study is in its third year and is sponsored by BlackRock's (NYSE: BLK) iShares, the world's largest ETF issuer.

Seventy-eight percent of asset managers and 44% of pensions, foundations and endowments use ETFs for cash equitization. Sixty-one percent of asset managers and 55% of institutional funds use ETFs for manager transitions, according to Greenwich Associates.

In stark contrast to 2011, more institutions and asset managers are using ETFs to bolster portfolio liquidity and reduce costs. Thirty-one percent of institutional funds and one-third of asset managers are using ETFs to accomplish those objectives compared to just 10% last year, according to the study.

In 2012, 28% of asset managers and 42% of institutional investors are using ETFs for portfolio completion up from just 20% on the institutional side last year.

ETFs have long been popular with college endowments. At the end of the fourth quarter, Harvard Management, the larges U.S. college endowment, held stakes in at least 10 ETFs including the iShares MSCI Brazil Index Fund (NYSE: EWZ), the iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW), the Market Vectors Indonesia ETF (NYSE: IDX) and the Market Vectors Russia ETF (NYSE: RSX).

As another example, Stanford University's endowment fund held stakes in the iShares MSCI EAFE Index Fund (NYSE: EFA) and the iShares MSCI Emerging Markets Index Fund (NYSE: EEM) at the end of the fourth quarter.

Among public employee pension plans, the California Public Employees Retirement System, or Calpers, held a position in the SPDR S&P Emerging Markets Small Cap ETF (NYSE: EWX) at the end of last year. The U.S. Steel & Carnegie Pension held a massive stake in the SPDR S&P 500 (NYSE: SPY) at the end of the fourth quarter.

The study, which was conducted between February and April 2012, study identified iShares as the most widely used ETF provider by institutional investors. Among participants, nearly 90% of institutional investors and asset managers identified iShares ETFs as among their portfolio holdings.